It announced that it will instead acquire a large stake in Hong Kong-based Pegasus Entertainment.
Celebrated actor-director-producer Raymond Wong (aka Wong Pak-ming) is to sell 29.9% of Pegasus to Xinke for $25 million (HK$194 million.) Wong, who founded the company in 2010, sees his share stake drop to 19.9% and is no longer designated as the controlling shareholder.
Xinke said in a regulatory filing to the Shanghai Stock Exchange on Wednesday that Minuit Holdings, and Leone parent companies of Voltage, had failed to provide it with documentation sought by Chinese regulators. Xinke said that it had sought the additional information from Nicolas Chartier and his mother Jennifer Chartier on three occasions, and that it was therefore annulling the deal.
“The trading partners did not actively co-operate with us to complete this restructuring plan. In the light of such uncertainties the company decided to cease the acquisition plan,” Xinke said in its statement to shareholders.
Xinke last month announced that it had agreed to buy an 80% stake in the Oscar-winning production and sales firm Voltage Pictures. Headed by Nicolas Chartier, Voltage was producer on both “The Dallas Buyers Club” and “The Hurt Locker.” Xinke said that it would pay a minimum of $345 million for the stake, with the price possibly rising to $518 million.
Regulators then asked Xinke for additional information, as the purchase appeared to fall foul of new rules on the transfer of capital overseas. Those rules were announced at the beginning of December, after the Voltage announcement had been made, but before its anticipated close at the end of this month.
As the Chinese currency has weakened – it is now at its lowest point in eight years against the U.S. dollar – the volume of capital moved out of the country by Chinese companies, investors and individuals in search of higher returns has expanded.
According to the deliberately opaque new capital controls, transactions of over $1 billion would be limited and subject to investigation. So too would overseas purchases in sectors that are not a company’s core business.
Earlier this year, Xinke established a Hong Kong-based fund, Wotaiji International Media, to make media purchases. But Voltage was its first acquisition outside its main metals core.
Pegasus and Wong offered no explanation for the sale of the company Wong founded. Pegasus is a producer and distributor in film and TV, with credits including the Wong-directed “All’s Well” series of ensemble comedies. It recently produced “Bounty Hunters” which scored $31.9 million on its release in mainland China.